By contrast, the August to September National Association of Purchasing Management�s Index of manufacturing activity moved down only ever so slightly to 47.0 from 47.9 in August. The composite index for Consumer Confidence declined sharply to 97.6 from 114 in August. The magnitude of the decline was greater than expected even though it was anticipated. The survey was almost fully completed prior to September 11, and the economy is in recession [if one excludes government spending] prior to September 11, but recent events have exacerbated economic conditions in general and especially for the lodging sector. The Consumer Confidence decline mirrors almost exactly that which took place when Iraq invaded Kuwait in August of 1990. 

The University of Michigan�s consumer sentiment index is down, also, nearly 10 points from August�s reading falling to 81.8 from 91.5. This consumer sentiment reading is not a good sign for near-term consumer spending. The question now becomes how severe and long lasting the impact of the terrorists activity will be on consumer spending in general and its effect on the lodging sector. If consumers hold back in the short term, this may send a signal to the manufacturing sector forcing cuts in production as a response to rising inventories. Lodging executives indicate a more positive scenario with the Future Situation Index reading of 90.0!

The Rooms Reservations Index calculation for the month of September declined sharply to 40.0 compared to 66.7 in August when lodging executives indicated that we had �made the turn� moving from 35.3 in July. The Rooms Reservation Index asks executives what they expected for rooms reservations/bookings over the next 12 months compared to the last 12 months. Now in its eighth month, the Employment Index evidenced a steep proposed reduction in the total number of non-management employees with an index reading of 30.0. The Employment Index asks lodging executives if they plan to add, keep the same, or reduce the total number of non-management employees over the next 12-month horizon.

The LEsI is a nationwide poll of lodging industry executives in operations, finance and development, and marketing who represent all segments of the lodging industry. LodgingForecast.com holds its executives� responses in strictest confidence; only the final summary analysis is reported, and the summary analysis encompasses upwards of 2 million hotel rooms.
 

About the Index

Following the National Association of Purchasing Managers (NAMP) Index method of tracking economic indicators, the LEsI is a diffusion index--a convenient summary measure showing the prevailing direction of change and the magnitude of change for the Lodging Industry. The LEsI is a leading indicator based on opinions of lodging executives looking into the future as well as weighing in on the current situation.

About LodgingForecast.com

LodgingForecast.com publishes several lodging-related indicators each month. In an agreement with PKF�s Hospitality Research Group and using proprietary forecasting models, LodgingForecast.com generates the LEsI and 18-month forecasts for occupancy, ADR, RevPAR, as well as construction and employment costs with its Lodging Industry Barometer (LIB). The LIB is a composite, quantitative assessment of the lodging industry�s national business cycle that weighs room rates and occupancy.